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MSREI holds $1.9bn first close for G9 – Exclusive

The real estate investing arm of the New York-based financial services firm has already surpassed the size of its predecessor fund.

Morgan Stanley Real Estate Investing has captured $1.9 billion in the first closing for its latest opportunistic real estate fund, North Haven Real Estate Fund IX Global (G9), according to a filing with the Securities and Exchange Commission.

The firm registered the fund with the SEC last November. The target for the vehicle has not been disclosed.

Morgan Stanley declined to comment, but PERE understands that the limited partners in the first close were predominantly existing investors. A major European investor is said to be among the new names that will be committing to the fund.

Already, G9 has eclipsed the size of its predecessor, North Haven Real Estate Fund VIII Global, which gathered a total of $1.7 billion in 2015, against a $3 billion target. G8 investors encompassed public and private pension funds, sovereign wealth funds, insurance companies, family offices and individual investors. Among them were Denmark’s largest commercial pension fund, PFA Pension, and UK pension plan Clwyd Pension Fund, according to PERE research.

G8 represented the first time MSREI had raised opportunistic real estate capital since the final close of Morgan Stanley Real Estate Fund VII Global on $4.7 billion in 2010. It also marked the first opportunistic real estate fundraising led by then-co-chief executive officers and co-chief investment officers Olivier de Poulpiquet and John Klopp. Last year, Klopp was elevated to head of the firm’s newly-created real assets group, with de Poulpiquet becoming MSREI’s sole CEO and CIO.

North Haven is the closed-end fund series of Morgan Stanley Merchant Banking & Real Estate Investing, the direct private investing business of Morgan Stanley. MSREI has attracted nearly $30 billion in opportunistic capital since the inception of the series more than two decades ago. The largest of these funds, G6, hauled in more than $8 billion from investors.

However, the fund series took a hit from the poor performance of the fund as well as a number of leadership changes. The successor fund, G7, raised $4 billion, less than half of its $10 billion target.

With fundraising for G9 already off to a strong start, the upcoming second close for the vehicle will be considered a litmus test as to the extent of MSREI’s comeback in the opportunistic fundraising space, according to a source familiar with the matter.

MSREI also has been active in raising capital in the core space, having collected $650 million for its first Asia-focused core vehicle, the Prime Property Fund Asia, PERE reported last month. The majority of the fund’s capital is said to have come from European investors, including PFA Pension, which is understood to have committed between $150 million and $200 million.

-Jonathan Brasse contributed to this story.